Q&A With Guided Luxury

In a recent interview with global luxury magazine, Guided Luxury, Kora Drage, Principal of Visia Financial Services spoke about why she guides clients towards wiser financial choices that genuinely transform their lives.

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Questions & Answers

What do you think is the key to financial freedom?

Knowing what you want. So many people know what they want right now; the “Cottesloe five-minute walk to the beach” house, the Mercedes G300, the Tiffany necklace, the first-class trip to Switzerland for Christmas in the snow… but what next? And then after that? Knowing what you want long-term means that you can be more tactical about your decisions.

Knowing where you are going lights up the path, and the milestones along the way. Don’t get caught up in immediate gratification, build a life where you get what you want and aren’t always chasing the next best thing!

What behavioural or psychological patterns have you noticed among clients that hinder their wealth-building progress and how do you help them overcome these challenges?

They don't perceive money as energy. Money thrives on attention and nurturing it fosters growth. Often people underestimate the significance of money and, instead, they spend it quickly without considering the consequences.

I think there's a sense of guilt tied to having money, a tendency to spend it hastily, combined with a desire to match others' lifestyles. Our approach involves taking money seriously and easing people’s stress by guiding them to understand how their financial decisions impact their future. It's not just about the numbers; it's about what that money means for their life ahead.

If you are driven by that big-picture, long-term vision, if you keep reconnecting with it regularly; it’s like a secret weapon and will push you to do whatever it takes to get to the dream destination.

Are there specific habits or practices you encourage clients to adopt that have consistently contributed to their wealth accumulation but are not commonly known?

Being aware of your expenses is a common focus, yet the secret to wealth is earning more than you spend. I don’t mean “Work harder”, it’s understanding that you need to build assets that generate passive income. The key lies in changing your habit from focusing on what’s left over after all the expenses are paid, to consistently investing ongoing.

Growth assets, such as property, shares and profit taking managed funds generate income in the form of rent, dividends and profit distributions.

How do you educate clients to take an active role in their financial decisions, especially in areas they might not be familiar with or often disregard?

We empower our clients by fostering a supportive environment where they feel at ease outsourcing tasks they may not be familiar with. Through open discussions and education, we help them understand the impact of financial decisions, but we are a resource to effectively handle those changes on their behalf, rather than simply giving instructions on how to Do It Yourself. This process allows them to actively participate in decision-making, while entrusting certain aspects to professionals when needed; creating a balanced and informed approach to their finances.

Can you highlight two strategies that clients tend to overlook but can significantly impact their wealth-building efforts?

Starting now. Showing clients the impact of compounding benefits often surprises them. Making investment contributions or a property acquisition sooner can far outweigh great returns down the track, simply by allowing your money more time to grow. We help our clients to implement strategies concurrently whilst balancing their lifestyle needs, helping them make crucial decisions sooner rather than waiting for a more opportune moment.

Salary Sacrifice is also a fabulous tax-effective strategy. It involves redirecting a portion of pre-tax income into the individual's superannuation account. Contributions are taxed at a concessional rate, potentially leading to tax savings. This can be both a short or long-term strategy; if they’re over 60 they might even have access to the funds immediately, just at a lower tax rate.

What lesser-known investment opportunities or financial structures do you believe hold great potential for wealth accumulation but are often misunderstood or ignored by clients?

Discretionary trusts and bucket companies are flexible financial entities. Working with their accountant, successful wealth accumulators often use these entities as opportunities for tax planning, income distribution, and protection of assets.

A trust allows for the distribution of income and assets among family members while providing flexibility. It can be particularly beneficial for managing tax liabilities as income can be distributed to family members in lower tax brackets. It also offers asset protection by separating personal assets from business activities, shielding them from business risks.

A bucket company, often used in conjunction with a family trust, is a type of proprietary limited company. It can retain profits, allowing for tax-deferred investment and providing more control over the timing of income distribution. It also offers a layer of asset protection as it operates as a separate legal entity.

From your experience, what role does property Estate Planning play in long term wealth preservation, and what are some aspects of it that clients commonly neglect or misunderstand?

Your wealth forms part of your legacy, and thoughtful Estate Planning ensures it reaches the intended beneficiaries or communities that hold the most significance.

The most critical oversight occurs when clients neglect Estate Planning entirely, whether it's lacking a will, power of attorney, no beneficiaries on their superannuation, or medical guardianship. Even having these plans in place might not suffice if they aren't updated to reflect life’s changes.

Odds of death are one-in-one, ignoring that it might happen to you isn’t based in fact. There will be no escaping your mortality, so you may as well rule from the grave.